Musgrave profits up 3% to €72m as sales fall

MUSGRAVE GROUP increased its profits by 3 per cent last year, despite a 3 per cent fall in sales. The grocery and cash and carry group reported overall sales of €4.4 billion, with pretax profits arriving at €72 million.

The company also paid down debt of €59 million and ended 2010 with net cash of €21 million.

Turnover fell in all of Musgrave’s geographical markets last year, although the Irish market was the worst hit.

In the Republic, where Musgrave operates the SuperValu, Centra and Daybreak symbol groups, the group’s turnover declined 3.6 per cent to €2.6 billion. In the UK, where its brands include Londis and Mace, sales fell fractionally to €1.57 billion. In Spain, where the group is eyeing expansion opportunities, they fell 2.6 per cent to €185 million.

“It is a good set of results when you think of the context, particularly the economic crisis in Ireland,” said Musgrave group chief executive Chris Martin.

The retail and wholesale group, which includes “not being greedy” in its list of corporate values, implemented “significant” price cuts in the early part of 2010 in line with deflation in the grocery sector.

“Since the start of 2011, prices have been edging up, which is a function of higher prices for commodities such as cocoa and wheat, which are having an impact on things like pasta, cereals and chocolate,” Mr Martin said.

“Consumers are now facing into the next phase of the recession with rising fuel prices, higher taxes and uncertain employment prospects,” said Mr Martin.

“Our view of the market is that it will remain tough.”

Musgrave’s retail partners secured combined sales of €6.5 billion in 2010, down 1.5 per cent.

In Ireland, Centra retailers invested €7.6 million in new stores and refurbishments, with further investment of €17.3 million expected in 2011. There are now 468 Centra stores in the Republic and 82 in Northern Ireland.

Musgrave’s SuperValu retail partners invested €23 million in new stores, extensions and refurbishments, with further investment of €16.7 million expected this year. The group said the introduction of Real Rewards, a SuperValu loyalty card, had been a success, with the card used in 55 per cent of sales. There are 192 independently owned SuperValu stores in the Republic and some 41 in Northern Ireland.

The Mace brand was relaunched in Northern Ireland last year, with more than 50 rebranded stores and 20 new stores openings, leading to the creation of 110 jobs. In Britain, more than 200 retailers joined the Londis brand, taking the total number of Londis stores to 1,784. Musgrave also operates 192 Budgens stores in Britain. Mr Martin added that the group had no plans for further redundancies, after 150 job losses in Ireland last year.